The US Securities and Exchange Commission has escalated its dispute with Institutional Shareholder Services (ISS), filing a subpoena enforcement action in the Eastern District of Pennsylvania on September 4, 2026. The filing follows ISS's refusal to fully comply with an administrative subpoena issued on July 21, 2026, part of a broader SEC examination that began in March.

The SEC is asking a federal court to compel ISS to produce core operational documents, including its proxy voting recommendations, internal methodologies, and compliance records. ISS has resisted, arguing that full compliance could violate its First Amendment rights and expose both the firm and its clients to retaliation over sensitive corporate voting matters.

What the SEC is after

ISS is far from a niche consultancy. Together with its main competitor Glass Lewis, the firm controls roughly 90% of the proxy advisory market. As a result, when ISS issues a recommendation on how shareholders should vote on executive pay, board members, or mergers, the effects reach trillions of dollars in institutional assets. Fund managers rely on ISS in part because proxy ballots routinely span hundreds of proposals across thousands of portfolio companies each year, making outsourced research and voting guidance a practical necessity.

The SEC's investigation centers on whether ISS has been operating in compliance with federal securities laws in its capacity as a registered investment adviser. The subpoena specifically targets the methodology behind its voting recommendations — the kind of proprietary information that proxy advisory firms guard closely.

ISS has cooperated with some of the SEC's requests but drew a line at handing over certain documents, raising two main objections. First, the firm claims its proxy recommendations constitute protected speech under the First Amendment. Second, it argues that disclosing detailed client voting information could trigger backlash from corporations unhappy with how those votes were cast.

The SEC has characterized the matter as a straightforward factual investigation. No allegations of misconduct have been leveled against ISS at this point. If the court grants enforcement, the ruling could clarify how far the SEC can reach into the internal workings of proxy advisers; if it sides with ISS's constitutional objections, it would mark a rare judicial limit on the agency's examination authority.

ISS has been here before

This is not the first time ISS has faced an SEC action. In 2013, the firm paid a $300,000 penalty to settle charges that it failed to maintain adequate safeguards around client proxy voting information.

Under the Trump administration, regulatory scrutiny of proxy advisory firms has intensified, driven partly by corporate lobbying groups that have long argued ISS and Glass Lewis wield too much unchecked influence over shareholder votes. Companies have complained for years that the firms' recommendations, particularly on issues like executive compensation and environmental disclosures, can effectively override management's preferences without sufficient accountability. The SEC previously adopted rules in 2020 tightening oversight of proxy advisers, but a federal appeals court vacated portions of them in 2022, leaving the sector in a regulatory gray zone that the current enforcement push may be intended to address.